The transaction is subject to Family Dollar stockholder approval, expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act and other customary closing conditions, the statement added.

Dollar Tree intends to finance the acquisition through a combination of existing cash on hand, bank debt and bonds.

Dollar Tree's offer of $74.50 per share in cash and stock represents a 22.8% premium over Family Dollar's close of $60.66 on 25 July, according to the statement.

Morgan Stanley advised Family Dollar while JPMorgan Securities was the financial adviser to Dollar Tree.

Activist investor Carl Icahn, Family Dollar's largest shareholder with a 9.4% stake, wanted the company to sell itself to Dollar General to help it deal with tough competition from retailers such as Wal-Mart Stores.